This paper applies the standard rational expectations competitive storage model to the study of thirteen commodities. It explains the skewness and the existence of rare, but violent, explosions in prices coupled with a high degree of price autocorrelation in more normal times. A feature of the...

For thirty years it has been accepted that consumption is smooth because permanent income is smoother than measured income. This paper considers the evidence for the contrary position--that permanent income is in fact less smooth than measured income, so that the smoothness of consumption cannot...